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Monday, July 23, 2012

How Did Time Use Change in the Recession?

When U.S. unemployment rate started rising, going from 5.0% in January 2008 to 7.3% by December 2008, and thus on up to a peak of 10.0% in October 2009, many people had many fewer work hours. What did they do with those hours? Mark Aguiar, Erik Hurst, and Loukas Karabarbounis have the answer in "Time Use During Recessions," which is NBER Working Paper #17259. (NBER working papers are not freely available to the public, but many academic readers will have access through library subscriptions.)

The authors make use of the American Time Use Survey, which is conducted by the Census Bureau. It first started collecting data regularly on how people spend their time in 2003. Here's a summary figure showing patterns of hours worked, leisure hours, and hours of non-market work. The blue dashed line in each panel is a best-fit line for the data from 2003-2008, extrapolated forward for 2009-2010. The solid line is actual data. Thus, hours of market work was on an upward trend in 2003-2008, but dropped sharply when the recession hit. Leisure hours were on an upward trend, but then rose faster. Hours of non-market work were on a downward trend, but then reversed direction.

Figuring out how the reduction in hours worked is related to the rise in leisure and in non-market work is a bit tricky. Earlier trends need to be taken into account, for example. The Aguiar, Hurst, and Karabarbounis approach is to look at data across states. In general, states were showing much the same overall pattern in time use from 2003-2008. But the unemployment rates varied across states, and so one can then use statistical methods to see how time use changes in states that had bigger changes in unemployment vs. states with medium or lesser changes. Given that approach, here's what they find (citations omitted):

"[W]e find that roughly 30% of the foregone market work hours are reallocated to non-market production (excluding child care). ... In particular, about 13% of foregone work hours are allocated to what we refer as core home production activities (cooking, cleaning, laundry, etc.), about 8% to increased shopping intensity, another 4% to the care of other older adults, and about 7% to home maintenance and repair. In addition, around 6% of the foregone market work hours are reallocated to child care.

"[L]ess than 1% of the foregone market work hours are allocated to job search. However, this represents a fairly large percentage increase given how little time unemployed workers allocate to job search. We show that individuals increase their time investments in their own health care, their own education, and civic activities. Specifically, around 12% of foregone market hours are allocated to these investments."

We show that the bulk of the foregone market work time during the recent recession is allocated to leisure. ... These categories include, for example, socializing with one’s friends, watching television, reading, and going to the movies. We include sleep, eating, and personal care into our leisure measure given that the marginal investments in these activities may be more akin to leisure than personal maintenance. ... [L]eisure activities absorb only about 50% of a given decrease of market work. Additionally, a large fraction of this reallocation is directed towards sleep (more than 20% of foregone work hours)."